Washington – A legal match between the Biden Administration and Republican attorneys general threaten billions of dollars in aid to state and local governments while the federal government prepares to implement the $ 1.9 billion US bailout plan. signed into law this month.
Twenty-one attorneys general has issued a covert legal threat to the Treasury Department – while the Ohio attorney general has already turned to the courts – over the wires related to the $ 350 billion for state and state local governments addressing the economic consequences of coronavirus pandemic.
Under the sweeping package, the money given to states cannot be used for pension funds or to reimburse tax cuts “directly or indirectly”. The Republican Attorney General now envisages the provision that money is not spent on tax cuts and warns that the condition unconstitutionally hinders their efforts to reduce taxes, even if the tax cuts were planned before the adoption of the U.S. bailout plan.
The 21 civil servants sent a letter to the Treasury Department last week to clarify the provision, which they say could be interpreted as the federal government trying to deprive states of their authority to enforce tax policy.
“This language can be read to deny states that they can reduce taxes in any way – even if they would have provided such tax relief with or without the prospect of COVID-19 aid funds,” officials told Finance Minister Janet Yellen , written. warns that the provision as written amounts to an unprecedented and unconstitutional intrusion of the separate sovereignty of the states. ‘
The letter contains more than a dozen tax cuts or credits being considered by states that could jeopardize their coronavirus assistance. The Attorney General said we would take the necessary additional steps to ensure that our states have the clarity and assurance needed to provide for the well-being of our citizens through the regulation and implementation of citizens’ well-being. sensible tax policies, including tax relief. ‘
Aside from the 21-year-old attorney general’s criminal, Ohio Attorney General Dave Yost is asking a federal court in the state to block the application of the condition. The argument is that the ‘forced supply of federal funds’ is unconstitutional because Congress exceeded its authority when it passed the mandate.
Because money is functional, Yost said in a request for a preliminary injunction to the court: ‘any money a state receives through the act will necessarily offset, directly or indirectly, any tax cut that the state can pursue. ‘
“The tax mandate therefore gives the states a choice: they can have either the much-needed federal funds or their sovereign authority to determine the state’s tax policy. But they can not have both,” he said. “In our current economic crisis, it’s not a choice at all. It’s a metaphorical ‘gun to the head’.”
Yost is so far the only attorney general asking the courts to intervene, but Ilya Somin, a law professor at George Mason University, expects others to follow suit by joining Ohio’s lawsuit or filing their own. unless Biden’s government says it does not intend to enforce the provision.
For states that dispute the tax provision in the COVID-19 relief package, Somin said they have a strong argument about the lack of clarity on what states should do to receive their share of the money.
The Supreme Court said the conditions attached to the receipt of federal dollars should be unambiguously established and could not be mandatory, and the Supreme Court further explained whether a condition is mandatory in its 2012 ruling that outlines the provisions of the Affordable Care Act declared invalid requiring states to cancel their Medicaid programs or the risk of losing federal Medicaid funding.
“The strongest problem the Republican states have is that it just’s not very clear what the provision means,” he told CBS News. “It’s not clear whether you are forfeiting the money that the act would give you, or just the amount you lose through tax cuts. It is also not clear what it means by using ‘directly or indirectly’. to make up for lost income as a result of tax cuts. ‘
The case in Ohio, according to him, has teeth for the same reasons why the Trump administration has lost legal battles over attempts to withhold federal money from sanctuaries that have refused to cooperate with immigration authorities.
In cases involving the previous government, Somin said Congress never approved the imposition of conditions on state and local governments that received the money the Trump administration wanted to withdraw.
“Under Obama administrations, Republican states used the federalism argument to attack Obama’s policies. Under Trump, it was blue states and cities that did it, and now we’re coming back the other way around,” Somin said. “It’s a common phenomenon, but it shows that federalism can protect states of different kinds of political beliefs.”
“The irony,” he continued, “is that if this thing fails, it could fail on some bases like Trump’s attempt to force sanctuaries.”
Somin said he was not aware of a similar provision in a law of the same scope as the comprehensive coronavirus relief package.
At the heart of the Republicans’ challenge to the ban is that you “can not let Uncle Sam let the good people in Louisiana or Texas know how to run their tax systems,” Kenneth Manning, a professor of political science at the University of Massachusetts, Dartmouth, told CBS News.
“States need the cash,” he said of the aid in the rescue plan. “There are a lot of crumbling schools and besieged unemployment systems and the list is endless of what the needs are at the state level. I don’t see big tax cuts from this.”
President Biden achieved a major legal victory when Congress narrowly passed his $ 1.9 billion relief package, and he and his top administration officials have embarked on a nationwide tour to reap the benefits. Nevertheless, more details are expected from the Treasury Department on the implementation of the stimulus package.
By law, states are ready to receive their federal aid within 60 days of submitting documentation to the federal government.